MANAGING CLIENT EXPECTATIONS Andrew Reeves
Solutions for managing financial negotiation and in particular over-servicing.
You’ll learn:
• How to manage client expectations to get paid appropriately for your work
• Ways to provide value for money other than through discounted fees
• When it’s time to say no to pricing concession demands
Over worked and under paid
In a service industry like ours, the natural default is to ensure we exceed client expectations. This is right and proper, and means we can charge a fee worthy of the service delivered.
All too often however, our desire to exceed expectations and our right to get paid for a quality job gets blurred and we risk being over worked and under paid.
The chapter shares some tips on how to manage your client to ensure you get paid appropriately for the work that you do.
Step 1: Accept that you are on the back foot
When it comes to providing solutions for our clients we are so determined to demonstrate value from the very beginning that we will often invest a huge amount of time thinking about solutions and preparing options that we carefully present for client approval. At this stage, we think nothing of overinvesting to woo our clients and close a sale.
In total contrast, our clients engage in considered processes designed to maximise value and minimise price. They will happily extract every concession we are willing to offer and continue to ask for more. This is just business and they are generally far more professional at buying then we are at selling.
Recognising this dynamic allows you to deal with it. We can professionalise our selling process to make this more aligned with client procurement processes once we recognise it’s a problem.
Step 2: Establish where you make the most impact
In any transaction the buyer has options. They will look to appoint someone who best meets their objectives and they will balance price versus quality. Value for money is never the cheapest option, it is the best option given a specific budget and will be different for different clients.
Make sure you know clearly what your value for money offer is and be proud of it.
When clients look for discounts, you are already in their range of affordability based on the level of service they are looking for. Remember, there are always cheaper options and many of these will require compromises in quality.
Step 3: Establish on what grounds you will be prepared to offer a discount
In many cases discounting is simply giving money away. However, when used carefully, discounting can provide you with benefits too.
Always consider a wish list of opportunities you would enjoy from clients if they were available. These could be a long contract period, incremental scope opportunities or earlier payment terms - all items that a client may be prepared to trade with you in exchange for a requested discount.
Step 4: Be prepared to walk away
In certain circumstances, you may find that pricing or scope concessions are relentless. Every time you give in to a price cut or scope increment you find there is another request for more almost immediately.
There is a clear logic at play here, if you never say no to a request, your client will think there is always room to ask for more.
Learn to say ‘no’ early, or even better, ‘no but…’ where the ‘but’ provides you with possibility to table opportunities for your agency that you have identified.
Step 5: Have a written contract on what you agreed
It can be very easy to get carried away in a hard fought for, lengthy negotiation in which the details have become quite complicated, especially in terms of the deliverables and scope.
As part of any negotiation, it is essential to write down in granular detail the specific terms agreed. All too often contracts are tight on general terms and conditions but can be weak when it comes to what specific deliverables and outcomes are included in the price.
Step 6: Maintain good quality internal records
Having agreed a good contract with a clear scope of work and related fees, it is important you monitor its progress. This includes both the actual work as well as the process assumptions calculated within the fees.
If for example, the fees included a certain amount of creative concepts, amendments and approvals, then increased levels of these beyond what was agreed should constitute a change of scope, necessitating a discussion with the client.
Conversely, if you made assumptions about the length of time the work would take based on pre-agreed processes which have been maintained, but it has taken much longer, then it is likely that you have efficiency issues that need to be addressed internally.
Step 7: Build in regular evaluations
Every contract will have variations to some extent and this is normal. In particular, scopes of activities will be subject to changes in business dynamics such as competitive activity, which may influence which activities become priority.
In addition, it is normal practice for contractual processes to become compromised through genuine day-to-day disturbances that can affect the quality of delivery. In particular, new relationships take time to bed in as both agency and client get to know each other.
For that reason, it essential that regular evaluations are held. This should be a collective review of what has been actually delivered vs. what was expected, for both level and quality of activity.
Step 8: Escalate early when things go wrong
In any relationship it is better to be up front when something goes wrong. This is equally true in agency engagements.
Where bad behaviours start to appear, such as poor process adherence or incremental scope creep, dealing with these early sends a strong message that will pay dividends. Conversely, ignoring problems will lead your clients to assume that you don’t have problems and effectively encourage bad habits to grow.
Ensure you have a clear escalation plan with the right people so early problems can be dealt with efficiently and effectively.
Step 9: Continue to adapt & innovate as the relationship requires
Nothing stays the same for long and being flexible is key to a healthy and progressive relationship.
As you learn more about your client’s business and what works for them you should be able to develop new ways of working that will improve both the efficiency of your work and its effectiveness.
Increasingly technology and data provide us with more knowledge on how to do the job better. Being proactive in this regard, to the benefit of your client, will increase the quality of the relationship and hold you in good stead going forward.
Step 10: Maintain a healthy relationship and common sense at all times
Finally, having good contracts and clear ways of working to negotiate prices and manage scope is a fundamental hygiene factor for most agencies. Often what’s more important is simply the chemistry between an agency and its client.
Where a good contract will see you through the early years and provide good guidelines for how to manage the work, the strength of the relationship will see you though the tough times.
It may take years to develop this type of relationship, however it will become far more important for the health of your business, helping you manage the peaks and troughs of a client engagement.
Final thoughts
Negotiation is something that we face every day in both our professional and private lives. When looked at from a perspective of what is the right thing to do, an effective negotiation becomes far more likely.
If you work hard, deliver what you say you’ll deliver, on time, to a high quality and on budget, you should be paid well. Hopefully the above steps will help guide you towards that end goal successfully, for both you and your clients.
Andrew Reeves is a commercial consultant within marketing services helping his clients develop and grow. His skill set is helping agencies develop the right financial tools including planning, operations and pricing to help realise their full potential.
Twitter: @easyreevesie
Online: www.reeves-consulting.com